The Importance of a Financial Advisor for Your Business

Apple reportedly has over $200 billion in cash! This is a serious of amount of money that only few other businesses can ever manage to accumulate. Although the company’s business model of innovation is highly profitable, there is no doubt it relies on experienced financial professionals to manage its vast billions.

See Also: Should I Hire a Financial Advisor

If you are a small or medium-sized business owner, the story is no different. You need a financial advisor, to not only help you in managing the money, but also ensure the business operates within the confines of relevant financial and tax regulations. Importantly, adopting better financial management practices can help your business to gain a competitive edge in a market environment that is unforgiving to weak businesses.

In detail, here are the benefits a financial advisor can bring to your business.

Best Practices

Businesses, small or large, must adopt sound financial management practices if they want to make the most of every cent. As an entrepreneur, you can be forgiven for thinking that you are the best-placed person to manage the financial affairs of your outfit. But how wrong! You need a professional with extensive financial knowledge to help your business adopt the best financial practices. The advisor will evaluate the business’s financial capacity and recommend suitable practices. For instance, if you run a fashion retail store, he or she can recommend the best financial management and accounting software for the business. If you don’t have a financial policy in place, then the advisor will come up with policies that will help to streamline facets such as accounting, financial reporting, procurement, sales and services, debt financing and cash handling.

Financial Goals Formulation

How much money do you expect your business to make in the next two, three or seven years? At what rate should the business profits be increasing? These are just some of the questions you ask yourself as an ambitious business owner. With little expertise, it can be difficult to accurately make financial projections for your business. If you want to approach a bank or venture capital firm for a mega-loan, they will definitely ask for these projections. Fortunately, the adviser can evaluate your business plans and financial statements, and develop financial forecasts.

As the business keeps expanding, the advisor will interpret its performance and let you know whether everything is going according to plan.

Regulatory Compliance

When you break financial laws, it doesn’t matter whether your business is a week or a decade old. The folks at FINRA or IRA will be knocking at your door. Being on the wrong side of law can cost your business thousands of dollars in steep financial penalties. This is something you cannot afford, especially if you are running a small business.

So, how do you ensure the business adheres to all relevant laws? Simple! Hire a financial advisor. You see, financial laws and regulations keep changing, and you may not have all the time to monitor the changes. It is even difficult in the US where businesses must comply with federal, state and local rules. A financial advisor will stay abreast of the changing regulations on your behalf and keep you updated. Since various laws affect businesses differently, he or she will develop strategies for ensuring the business adjusts accordingly to various regulatory changes.

Recruitment Advice

Financial advisors are, in most cases, only required to offer expert advice of various financial matters. When it comes to the daily management of business finances, you need to employ accountants and financial managers. Since these professionals greatly influence the financial direction of a business, it is important to get the right people on board. And this is where a financial advisor comes into play. From assessing the applicants’ academic and professional qualifications to taking part in the interview process, he or she will ensure you hire the right professionals for your business.

Investment Planning

Diversification is one of the best strategies businesses can use to expand and outperform competitors. With the business generating more revenue, the urge to invest in profitable ventures naturally develops. This is the reason why, in time, big companies expand and adopt other business models. Google, for example, was built on the search advertising model at its inception. Today, the company is very much a jack of all trades. Besides organizing the worlds’ information, you can find it manufacturing self-driven cars, developing operating systems and designing phones.

Because there are thousands of business opportunities, a financial advisor will make the diversification process easier. If you wish to invest in stocks, it is the advisor’s job to analyze the stock market and recommend the most profitable shares. What if you are clueless on where to put your profits? Well, your financial advisor should develop an elaborate investment strategy and work with you toward it implementation.

Mergers and Acquisitions

Mergers and acquisitions are a strategic part of business finance. Sometimes you are better of selling your business, as long as the potential buyer tables the right bid. And sometimes, especially when you want to gain market dominance, it is better to merge with another company.

Regardless of the context, a financial advisor is the closest thing you will come to making the right decisions. If you are looking to sell your company, he or she will calculate the worth of your business and ensure you sell it to the best buyer.

Mergers are trickier than acquisitions, so this is where you need more input from the advisor. Using his expertise, he will make you aware of the pros and cons of mergers and, most importantly, advise whether it is the right strategy for your business.

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Going Public

According to an article published by the Business Insider, the number of private companies going public has significantly reduced in 2015. Nonetheless, going public remains one of the best ways for businesses to raise more capital without incurring any liabilities. As a business owner, deciding whether to launch an IPO can be a tough decision to make. By working with a financial advisor, you will be able to receive expert counsel on what it takes to become a publicly traded company. For instance, you face the prospect of relinquishing some ownership of the businesses. Most importantly, you will learn how taking your business public, will benefit you financially.

Transfer the Worry

The peace of mind that comes with hiring a financial advisor is priceless. You will have the luxury of letting another person worry about the financial health of your business. So you can focus on other aspects of the business, such as customer acquisition, product or service management and public relations.

See Also: How to Make the Most of a Financial Advisor

To ensure you don’t miss out on any of these benefits, be sure to hire a financial advisor. However, you should be very cautious when hiring. There are several quacks out there masquerading as competent financial experts. Beyond an academic degree in finance, look out for holders of professional designations such as Chartered Financial Consultant and Certified Finance Planner. It is also essential to consider the success of the clients a prospective financial advisor has previously worked with.

Does your business have a financial advisor? Please share your experience with us in the comments section below…